On May 21, 2010, the Treasury Department issued Notice 2010-45, which established the Qualifying Therapeutic Discovery Project Tax Credit Program pursuant to the provisions of the Affordable Care Act of 2010 adopted 60 days prior. The Notice establishes the rules, definitions, forms and procedures for applying for the $1 billion of tax credits or grants (for taxpayers that are in a loss position) for up to 50 percent of “Qualified Investments” made or expected to be made during the 2009 and 2010 tax years in Qualified Therapeutic Discovery Projects (each, a “Project”).
As expected, the Notice sets a cap of $5 million of tax credits or grants for any single taxpayer for 2009 and 2010 combined. However, it appears that the IRS will also divide the money in the Program pro rata among all qualifying Projects by applying a per-Project “cap.” We do not know what the per-Project cap will be.
The deadline for the initial filing under the Program (the “Application”) is July 21, 2010, and all Applications filed prior to that date will have the same filing priority. The Form 8942 portion of the Application (the “Form”) will be released no later than June 21, 2010, which means taxpayers will have at least one full month during which they may file Applications.
The IRS will approve or deny all Applications no later than October 29, 2010, after which it will notify successful applicants by letter of the amount of credit or grant allocated to the taxpayer for each project. Grants for 2009 will be authorized for payment no later than October 29, 2010.
Initial applications may be submitted not only for 2009 tax year expenditures, but also for Qualified Investments made to date during the 2010 tax year and any Qualified Investment projected to be made during the remainder of the 2010 taxable year.
Pass through entities (partnerships, LLCs, etc) that have any owners that are non-profits, government entities, or other non-taxpaying owners are totally excluded from the Program.
For More Information
If you think that you may qualify for the program and are interested in more information, please email Kevin Sweeney (Kansas City) at KRSweeney@Polsinelli.com or Andy Hoyne (St. Louis) at AHoyne@Polsinelli.com today.
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